Mitsubishi 2003 Annual Report Download - page 52

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ANNUAL REPORT 2003 POWER TO CHANGE
Software intended for use by MMC and its consolidated subsidiaries are amortized by the straight-line method over the
software’s estimated useful lives.
(g) Allowance for doubtful accounts
The allowance for doubtful accounts has been provided based on the Company’s and its consolidated subsidiaries’ historical expe-
rience with respect to write-offs and an estimate of the amount of specific uncollectible accounts.
(h) Allowance for product warranty
The allowance for product warranty has been provided based on the Company’s and its consolidated subsidiaries’ historical experi-
ence and estimations with respect to future costs relating to after sales service.
(i) Retirement benefits
Accrued retirement benefits for employees at March 31, 2003 and 2002 have been provided mainly at an amount calculated based
on the retirement benefit obligation and the fair value of the pension plan assets as adjusted for unrecognized actuarial gain or loss
and unrecognized prior service cost.
Prior service cost is being amortized by the straight-line method over periods of 10 to 17 years and 10 to 22 years in the years
ended March 31, 2003 and 2002, respectively, which are within the estimated average remaining service years of the employees.
Actuarial gain and loss are amortized from the fiscal year following the year in which those are incurred by the straight-line
method within 10 to 21 years and 10 to 22 years for the years ended March 31, 2003 and 2002, respectively, which are within the
estimated average remaining service years of the employees.
(j) Accrual for retirement benefits for directors and corporate auditors
Certain directors and corporate auditors of MMC and its domestic consolidated subsidiaries are customarily entitled to lump-sum
payments under their respective unfunded severance benefit plans subject to the stockholders’ approval. Provision for severance
benefits for those directors and corporate auditors have been made at the estimated amount which would be paid if all directors and
corporate auditors resigned as of the balance sheet date.
(k) Revenue recognition
Revenue is generally recognized on sales of products at the time of shipment.
Certain domestic and foreign subsidiaries recognize revenues by the installment sales method whereby gross profit on such sales
is deferred and credited to income in proportion to the amount of the installment receivables which become due.
(l) Translation of foreign currency accounts
The accounts of the consolidated foreign subsidiaries are translated into yen as follows:
a. Asset and liability items are translated at the rate of exchange in effect on the balance sheet date of each subsidiary;
b. Components of stockholders’ equity are translated at their historical rates at acquisition or upon occurrence; and
c. Revenues, expenses and cash flow items are translated at the average rate for the financial period of each subsidiary. Translation
adjustments are included in “Stockholders’ equity.”
(m) Amounts per share
The computation of basic net income per share is based on the weighted average number of shares outstanding during each year.
Diluted net income per share is computed based on the weighted average number of shares of common stock outstanding each year
after giving effect to the dilutive potential of common stock to be issued upon the exercise of warrants and the conversion of convert-
ible bonds.